From beginner to professional: How to seamlessly navigate each stage

Feeling stuck as a cryptocurrency investor happens more often than you’d think. The effects of FOMO (fear of missing out) and the worry of losing it all can impact your ability to make the right decision when you’re limited by time, and this is when you’re most likely to act under various cognitive biases.

For example, confirmation bias makes you act without consulting negative data or seeing red flags, because your mind is only focusing on the positive. Or, you can experience the overconfidence bias that makes you overestimate your skills and act impulsively. To illustrate this, we can think of Elon Musk’s tweets about the Doge asset that made many investors learn how to buy Dogecoin right when its price peaked instead of buying the dip, which followed closely after his social media posts.

Therefore, investing in cryptocurrency is full of complexities, and if you are a beginner and struggle with strong emotions or biases, you might believe you will never reach the level of a professional. But don’t fret; here’s how to transition to an advanced step without much stress.

Spend more time in the beginner stage

There’s no fixed timeframe that you must respect when it comes to being a beginner in cryptocurrency, but it’s best to persist as long as you build a strong foundation of knowledge and skills. Learning the basics. Including how blockchains work and how other markets affect crypto, is best for making better investments.

During this stage, you will start to gather wealth even with small investments and learn the importance of portfolio diversification, asset allocation, and keeping your assets in different wallets. Even as a beginner, you must conduct proper risk assessment to protect your assets from volatility and/or cyberattacks, so there’s no hurry in getting to the next stage as long as you’re confident in your skills at this level.

Learn how to use more research tools

The slow transition from a beginner to an intermediate starts when you’re switching between several research tools through which you make investment decisions. Start with market data and aggregators, which offer you insight into the coin’s market cap stats and trading volumes, as well as important information about projects.

You might also want to master DeFi (Decentralized Finance) instruments and understand concepts like TVL (Total Value Locked), which represents the total capital in a protocol and signals, among other things, how liquid a project is. DeFi is important to analyze as an investor because protocols gain value in the real world, pushing for cryptocurrency adoption. You will also need to focus on blockchain intelligence, fundamental research, and social media sentiment, all of which will build more courage into taking calculated risks.

Balance discipline with risk-taking  

It goes without saying that investing in cryptocurrency, like any other asset market, comes with inevitable risks like volatility. Therefore, pursuing crypto investing as a side hustle or career means accepting there can be instances of losses, but you can minimize them by being more disciplined, and this is the way towards becoming a professional user.

Understanding how calculated risks work is essential, and there are three core principles that help establish them. First, the position sizing requirement assures you can limit the maximum number of losses, so in the case of a failed trade, you risk only 1% to 2% of the total portfolio. Then, the risk-to-reward ratio you can set to compare the amount of losses to the gains, which is commonly 1:2 or 1:3. Finally, establishing stop-loss and take-profit orders is the best method to change positions automatically when things go south, and this is another way to minimize losses because it handles the tough job for you, so you don’t get emotionally involved.

Recognize patterns and emotions

A skill you will have to work on throughout this entire process is recognizing your emotions and patterns and managing them in time, because they’re the most detrimental to your investing journey. Feeling scared, afraid, or restless when the market is going down will only put more pressure on you to sell or try to time the market for the perfect buy-back, but this usually ends with losses and a lot of frustration.

Handling strong emotions as a cryptocurrency investor is easier when you stay true to yourself and recognize repeating behaviors. If every time there are sudden crashes you constantly check your charts and forget that markets are recovering eventually, you might need to change your perspective and strategy by setting boundaries and choosing automation when possible.

Rely on a few impactful strategies

While learning many skills is effective in protecting your assets and generating results, sometimes the simplest solutions are the most efficient. Becoming a professional is easier when you’re committed to long-term investing that allows you to leverage only a few instruments for safety and income.

For example, dollar-cost averaging (DCA) is one of the most popular and useful ways to invest without much of a hassle. Basically, you set up a tool to automatically invest a fixed amount of money at the same time every week or month, whether the market is falling or surging, in order to even out losses when prices are different throughout the years.

You can decide on the amount to invest that’s safe to afford, and only after you’ve got all your ducks in a row: you have a savings account that can cover six months’ worth of fixed payments, have another source of income, and have some cash at home as well. You need these precautions because, in time, your portfolio allocation might change, as well as the goals and the market’s path, so better be safe than sorry.

Final considerations

Going from beginner to professional crypto investor is a path that many people would want to navigate faster, but taking your time is best if you want to do it right. Understand the basics and learn as much as you can about the industry, and sharpen your skills of discipline and risk-taking at your pace to generate sustainable results. You know when you’re ready for the next level when confidence is more than an overestimation bias and more like a stable pillar in your preparedness.